It would be interesting to see the market bottom at the cross section of the 200 week moving average with the 2022 highs some time by June/July. Markets aren't cheap now however they are above the 200 week.
My framework:
Markets above 200dma go 100% long with base equity allocation (decrease to 90% if RSI is overheated)
Markets below 200dma but above 200 week go 70% long with defensive bias
Markets below 200 week go 25% long with defensive bias, change to high risk with 70% allocation once cross above 200 week.
Saves me from the large drawdowns and shaves off some percentage point off performance however having buying power when all hell breaks loose can result in decade+ alpha opportunities.
The only sector currently above its 200dma is the equal weight utilities which I like in this environments all other sectors are below the 200dma. In such an environment markets are likely to be biased to the downside.
My framework:
Markets above 200dma go 100% long with base equity allocation (decrease to 90% if RSI is overheated)
Markets below 200dma but above 200 week go 70% long with defensive bias
Markets below 200 week go 25% long with defensive bias, change to high risk with 70% allocation once cross above 200 week.
Saves me from the large drawdowns and shaves off some percentage point off performance however having buying power when all hell breaks loose can result in decade+ alpha opportunities.
The only sector currently above its 200dma is the equal weight utilities which I like in this environments all other sectors are below the 200dma. In such an environment markets are likely to be biased to the downside.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.